Question One

On 1 January 2018 an entity with a 30 June financial year end decided to dispose of a
group of assets within the following year. These assets met the classification as held
for sale at that date .The carrying amounts of the assets and other relevant
information was as follows:

Land(1/7/2017) 14 136 150

Factory building (1/7/2017) Depreciated at 10% p.a reducing bal 67 146 810

Plant and equipment (1/7/2017) Depreciated at 15% reducing balance 26 800 000

Inventory(1/7/2017) 7 500 000

Inventory(30/6/2018) 5 900 000

Liabilities related to plant-1/7/2017 4 650 000

-30/06/2018 3 480 000

Investments (1/07/2017)(fair value) 15 000 000

(30/06/2018) fair value 18 000 000

Additional information

Fair Value of disposal group 145 000 000

Disposal costs 5 960 0000

Cumulative impairment loss recognised to (1/10/2017) 6 500 000

Required

Outline the accounting treatment for the group assets in terms of IFRS 5 on
30/06/2018 [15 Marks

Question Two
Question Eight

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations sets out the
principles governing the measurement and presentation of non-current assets that are
expected to be realised through sale rather than through continuing use. The standard
also deals with reporting the results of operations that qualify as discontinued.

REQUIREMENT:

Discuss what is meant in IFRS 5 by ‘available for immediate sale in its present
condition ‘ and ‘the sale must be highly probable’ ,setting out briefly why regulators
may question entities on the application of the standard. (10 marks)

b) On 1 October 2016, an entity with a 31 December financial year end decided to sell
a group of assets within the following year .The group of assets meets the condition
for classification as held for sale. The carrying amounts are as follows

Land(01/01/2016) 3 500 000

Buildings (01/01/2016) 12 000 000

Plant and Equipment(01/01/2016) 10 500 000

Inventory (1/10/2016) Net realisable value$ 1600 000 2 100 000

Investments(1/10/2016) 2 900 000

Liabilities related to the plant and equipment (1/10/2016) 1 050 000

Fair value of disposal group(1/10/2016) 25 800 000

Disposal costs of the whole group 2 500 000

Buildings are depreciated at 20% p.a reducing balance and plant and equipment at
10% straight line method .Plant has an original cost of $15 000 000

Required

Outline the accounting treatment for the group of assets in terms of IFRS 5on 1
October 2016, including relevant journal entries ( 15 marks